Sun Direct to invest $300 mn over next 5 yrs

Nandini Sivakumar, ET BureauOct 9, 2009, 08.07pm IST

CHENNAI: Sun Direct, an 80:20 joint venture between the Maran family (grand- nephews of TN CM Karunanidhi) the Astro Group of Malaysia, plans to invest $250-300 crore in the next four to five years in penetrating the DTH market. Currently being fully funded by its shareholders, the direct-to-home (DTH) service provider is open to raising money from the stock market when things improve, the company COO Tony D'Silva told ET.

Although he ruled out any plan to go public this year, he indicated next fiscal could be a possibility. The company had toyed with the idea of raising debt a few months ago, but has ruled it out now. "We are 100% debt-free at the moment. We can hope for a turnaround, once we have a critical mass of around 8-10 million subscribers. We hope to break even in the next five years," Mr D'Silva said.

Sun Direct expects a turnover of Rs 1,000 crore this year and Rs 1,500 crore next fiscal. With over 4.3 million subscribers at present, Sun Direct is tied at second spot with Tata Sky, next only to first-mover Dish TV that has a subscriber base of around 5.5 million. The southern major hopes to touch 6 million customers by the end of the fiscal and have 10 million on board in the next five years.

While competitors prefer to promote their value-added offerings like recording live TV and ordering pizza through the set-top-box, Sun Direct firmly believes in getting a big subscriber base first before venturing into the VAS territory. Nearly 70% of Sun Direct's subscribers are from semi-urban and rural areas.

"Marketshare growth is our first priority. Quality and service is not a problem. But competition with cable operators on price-points is the biggest challenge," Mr D'Silva said, adding : "The regulations should facilitate equity in pricing, be it cable operators, CAS or DTH. If the industry has to grow like the telecom sector, there has to be a level playing field. It is then that the DTH segment will get its inflex point and start growing rapidly."

There are 80 million cable and satellite (C&S) homes in the country, while the number of DTH connections stands at 14-15 million. Sun Direct currently has an average revenue per user (ARPU) of Rs 100 and added high definition (HD) TV services this April. "We will start offering value add-ons in the next six months, but only to our HD subscribers. At the lower end, it is not an easy task to get consumers to shift to DTH from cable TV," Mr D'Silva said.

It offers a Tamil and Telugu movie channel apart from National Geographic in the HD format, which is a premium offering. An HD subscriber has to shell out Rs 14,000 for the set-top-box, unlike the regular subscriber who gets it